Tale of the Tape 

Good evening everyone. 

Markets finally took a breather! Nifty (+0.4%) and Sensex (+0.2%) snapped a four-day loss streak. Midcaps (+2.5%) and Smallcaps (+2%) staged a recovery, with 393 stocks in the NSE 500 ending in the green! Check out the Stocktwits Sentiment Meter:

Most sectors ended in the green. PSU Banks (+4.2%) and Metals (+4%) were the top gainers. IT (-2.1%) and FMCG (-1.4%) were the two outliers.

Market intermediary stocks have seen an insane rally, but is the sun setting on India’s broking industry? Read our top story to figure out how to place your bets.

HCL Tech was the top NSE 500 loser after signalling a weak outlook. Delta Corp hit a 52-week-low on a poor Q3 show. More details below.

Adani Group stocks were on a roll! Check out their charts below to find out why.

United Spirits cracked -5% after announcing that its CEO abruptly resigned.

Brokerage reactions. Mahanagar Gas (+3%) was in focus after Morgan Stanley initiated coverage; it sees a +26% upside from current levels. Biocon jumped +6% after HSBC upgraded the stock; the brokerage’s new target price is Rs 460 p/sh (vs Rs 290 p/sh earlier).

Piramal Enterprises soared +8% after announcing it would get $140 million in FY26 from the sale of Life Molecular Imaging.

JSW Energy gained +6% after emerging as the winning bidder for KSK Mahanadi Power Company. PS - REC (+7%) and PFC (+8%) also gained because they are key creditors waiting to be repaid.

Here are the closing prints:

Market
Dark Clouds Gathering

Has India’s brokerage industry peaked? Yes, says Zerodha's Nithin Kamath who points out that 2024 was probably the “best year” for the sector and it’s starting to look like the “best is behind us”. Those are rough words for market intermediary stocks (brokers, exchanges, depositories) which have seen an INSANE rally since Covid.

So why do things seem so bad? There’s some signs that the good times are ending:

• The bull rally is over. We’re looking at a year full of uncertainty, correction & consolidation. Fewer people investing = less growth for market intermediaries.

• SEBI’s crackdown on F&O is a major party pooper. 

• The GOI is making the game more expensive with taxes. The LTCG hike was just the starter. People don’t want to invest if they don’t know if taxes will stay the same for 5-10 years.

While the first and third factors are long-term issues, the SEBI crackdown is adding pressure already. Take a look at Angel One, which reported its smallest Q3 profit increase in over four years. The stock cracked -7% intraday today after its topline fell -17% QoQ, while EBITDA fell -26% QoQ. Revenue from the broking segment fell by -10% QoQ due to the new rules & weak sentiment in the cash segment. The company says this is a one-time hit and it will monitor the impact of new SEBI rules before deciding on a price hike.

Big Picture: Before dooming, take a long-term view. Yes, we may not see 2024 growth for some time. But even if options & trading turnovers go back to 2021-levels, that’s still a HUGE jump from where we were a decade ago. Let a new normal be found and take things from there.

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